This article described three heuristics that are employed in making judgements under uncertainty: representativeness, which is usually employed when people are asked to judge the probability that an object or event A belongs to class or process B; availability of instances or scenarios, which is often employed when people are asked to assess the frequency of a class or the plausibility of a particular development; and adjustment from an anchor, which is usually employed in numerical prediction when a relevant value (...) is available. These heuristics are highly economical and usually effective, but they lead to systematic and predictable errors. A better understanding of these heuristics and of the biases to which they lead could improve judgements and decisions in situations of uncertainty. (shrink)

Can the general public learn to deal with risk and uncertainty, or do authorities need to steer people’s choices in the right direction? Libertarian paternalists argue that results from psychological research show that our reasoning is systematically flawed and that we are hardly educable because our cognitive biases resemble stable visual illusions. For that reason, they maintain, authorities who know what is best for us need to step in and steer our behavior with the help of “nudges.” Nudges are nothing (...) new, but justifying them on the basis of a latent irrationality is. In this article, I analyze the scientific evidence presented for such a justification. It suffers from narrow logical norms, that is, a misunderstanding of the nature of rational thinking, and from a confirmation bias, that is, selective reporting of research. These two flaws focus the blame on individuals’ minds rather than on external causes, such as industries that spend billions to nudge people into unhealthy behavior. I conclude that the claim that we are hardly educable lacks evidence and forecloses the true alternative to nudging: teaching people to become risk savvy. (shrink)

If citizens’ behavior threatens to harm others or seems not to be in their own interest, it is not uncommon for governments to attempt to change that behavior. Governmental policy makers can apply established tools from the governmental toolbox to this end. Alternatively, they can employ new tools that capitalize on the wealth of knowledge about human behavior and behavior change that has been accumulated in the behavioral sciences. Two contrasting approaches to behavior change are nudge policies and boost policies. (...) These policies rest on fundamentally different research programs on bounded rationality, namely, the heuristics and biases program and the simple heuristics program, respectively. This article examines the policy–theory coherence of each approach. To this end, it identifies the necessary assumptions underlying each policy and analyzes to what extent these assumptions are implied by the theoretical commitments of the respective research program. Two key results of this analysis are that the two policy approaches rest on diverging assumptions and that both suffer from disconnects with the respective theoretical program, but to different degrees: Nudging appears to be more adversely affected than boosting does. The article concludes with a discussion of the limits of the chosen evaluative dimension, policy–theory coherence, and reviews some other benchmarks on which policy programs can be assessed. (shrink)

It is my view that one essential difference between persons and other creatures is to be found in the structure of a person's will. Besides wanting and choosing and being moved to do this or that, men may also want to have certain desires and motives. They are capable of wanting to be different, in their preferences and purposes, from what they are. Many animals appear to have the capacity for what I shall call "first-order desires" or "desires of the (...) first order," which are simply desires to do or not to do one thing or another. No animal other than man, however, appears to have the capacity for reflective self-evaluation that is manifested in the formation of second-order desires. (shrink)

An argument against the bias towards the near; how a defence of temporal neutrality is not a defence of S; an appeal to inconsistency; why we should reject S and accept CP.

This essay examines the critique of behavioral economics that Infante, Lecouteaux and Sugden offer in:"Preference Purification and the Inner Rational Agent.” It identifies and questions three main criticisms that ILS make: a methodological criticism, alleging that there is no psychological basis for the attribution of purified preferences, an epistemological criticism, alleging that there is little evidence for claims about purified preferences, and a normative criticism, arguing that policies should aim to facilitate people’s choices rather than to satisfy purified preferences. The (...) essay also distinguishes the view of welfare economics defended in Preference, Value, Choice, and Welfare from the claims of behavioral economists ILS criticize. (shrink)

Desire-based theories of well-being claim that a person's well-being consists of the satisfaction of her desires. Many of these theories say that well-being consists of the satisfaction of desires that she would have if her desires were "corrected" in various ways. Some versions of this theory claim that the corrections involve having "full information" or being an "ideal observer." I argue that well-being does not depend on what one would desire if she were an “ideal observer.” Rather, it depends on (...) what she would desire if she had as much information as she could have and still maintain her identity as the particular person she is. The paper attempts to spell out this suggestion by constructing a notion of integrity. Roughly, integrity is preserved if one’s most central projects, commitments, and character traits are left in tact. I argue that desire-based theories of well-being should define well-being in terms of the satisfaction of those desires that one would have if one’s epistemic situation were idealized as much as would be consistent with maintaining her integrity. (shrink)

In this paper, we examine the problems facing a policy maker who observes inconsistent choices made by agents who are boundedly rational. We contrast a model-less and a model-based approach to welfare economics. We make the case for the model-based approach and examine its advantages as well as some problematic issues associated with it.

In traditional decision theory, utility is regarded as a mathematical representation of preferences to be inferred from agents hedonic experiences. Some go as far as to contend that utility is literally computed by specific neural areas and urge economists to complement or substitute their notion of utility with some neuro-psychological construct. In this paper, I distinguish three notions of utility that are frequently mentioned in debates about decision theory and examine some critical issues regarding their definition and measurability. Moreover, I (...) provide various empirical and conceptual reasons to doubt that economists should base decision theoretic analyses on some neuro-psychological notion of utility. (shrink)

Economists use tastes as a source of information about personal welfare and judge the effects of policies upon preference satisfaction; neoclassical welfare economics is the analytical embodiment of this preference sovereignty norm. For an initial distribution of wealth, the welfare-maximizing outcome is the one that exhausts all possible gains from trade. Gains from trade are defined relative to fixed ordinal preferences. This analytical apparatus consists of both the Pareto principle, which implies that externality-free voluntary trades increase welfare, and applied costbenefit (...) analysis, which attempts to weight costs and benefits when evaluating policies that are not Pareto improvements. (shrink)

Stéphane Lemaire | : Subjectivists about well-being claim that an object is good for someone if and only if this individual holds a certain type of pro-attitude toward this object. In this paper, I focus on the dispute among subjectivists that opposes those who think that the relevant pro-attitudes are actual to those who think that they are counterfactual under some idealized conditions. My main claim is that subjectivism should be stringently actualist, though our actual pro-attitudes may be criticized from (...) an intrinsic perspective. To defend this claim, I first present three desiderata that a subjectivist theory of well-being should fulfil. Two of these desiderata result from the fact that a subjectivist theory of well-being should not be implicitly paternalist, while the other is that it should be able to play a normative role. I then show that several actualist theories that introduce light forms of idealization or other conditions that have a similar aim, fail to satisfy at least one of the antipaternalist desiderata. This gives some legitimacy to a very stringent version of actualism. I then describe three features of the kind of stringent actualism that I want to defend, which will explain the ability of what is good for someone to play its normative role. Finally, I show how these features allow us to deal with the classic objection that the objects of actual “defective attitudes” cannot be good for the holder of these pro-attitudes. | : Les subjectivistes à propos du bien-être soutiennent qu’un objet est bon pour un individu si et seulement si cet individu possède un certain type d’attitude positive à l’égard de cet objet. Dans cet article, je me concentre sur le débat à l’intérieur du camp subjectiviste qui oppose ceux qui pensent que les attitudes positives pertinentes sont actuelles à ceux qui pensent qu’elles sont contrefactuelles sous une condition d’idéalisation. Ma thèse principale est que le subjectivisme devrait être rigoureusement actualiste bien que nos attitudes positives actuelles puissent être critiquées d’un point de vue qui leur est interne. Afin de défendre cette position, je présente d’abord trois desiderata qu’une théorie subjectiviste du bien-être devrait satisfaire. Deux de ces desiderata résultent du fait qu’une théorie subjectiviste du bien-être ne devrait pas être implicitement paternaliste, alors que le troisième résulte de ce qu’elle devrait pouvoir jouer un rôle normatif. Je montre ensuite que plusieurs théories actualistes qui introduisent des formes modestes d’idéalisation ou d’autres conditions ayant la même visée échouent à satisfaire au moins un des desiderata anti-paternalistes. Une version très rigoureuse de l’actualisme subjectiviste s’en trouve ainsi légitimée. Je décris ensuite les trois aspects de l’actualisme rigoureux que je souhaite défendre et qui permettront d’expliquer dans quelle mesure ce qui est bon pour un individu peut jouer un rôle normatif. Enfin, je montre comment ces aspects nous permettent de répondre à l’objection classique selon laquelle les objets d’« attitudes défectives » actuelles ne peuvent être bons pour ceux qui ont ces attitudes. (shrink)

Neoclassical economics assumes that individuals have stable and context-independent preferences, and uses preference satisfaction as a normative criterion. By calling this assumption into question, behavioural findings cause fundamental problems for normative economics. A common response to these problems is to treat deviations from conventional rational choice theory as mistakes, and to try to reconstruct the preferences that individuals would have acted on, had they reasoned correctly. We argue that this preference purification approach implicitly uses a dualistic model of the human (...) being, in which an inner rational agent is trapped in an outer psychological shell. This model is psychologically and philosophically problematic. (shrink)